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PEER COMPANIES

Higher dividend yields, buybacks and good numbers for the September quarter are pushing investors towards public sector undertaking (PSU) stocks to side step volatility of the broader markets. The BSE PSU index has fallen only 2 per cent since September 21 when the market correction began against the benchmark Sensex, which lost over 7 per cent in the same period.

Power Finance Corporation (PFC) and Bharat Electronics are among the top performing PSU stocks gaining more than over 20 per cent each. Investors also showed appetite for stocks of smaller PSU banks with shares of Oriental Bank of Commerce, UCO Bank and Allahabad Bank rising 15 per cent each.

The crisis in the non-banking financial companies (NBFCs) space dented risk appetite significantly in the last two months, market players said. In such a scenario, PSUs offer good investment opportunity especially through dividend yields. Besides, most PSUs are trading at deep discounts in terms of valuations after underperforming during the bull run in 2017 and early 2018.
PSU bank stocks are also gaining traction with analysts predicting the peaking of the non-performing assets (NPA) cycle in the next few quarters. State-owned bank stocks have also taken a huge beating in the recent times on account of asset quality concerns. Most of PSU bank stocks are still trading below their book value, which makes them an attractive buy, add market participants.